After a lower start at 18,600.88, the Sensex bounced back to close higher by 111.13 poins, or 0.59 per cent, at 18,793.44 on steady funds inflow. Today's gains reversed the loss of 110 points reported by the index on Friday.
The rally was led by stocks of capital goods, healthcare, banking and information technology sectors.
Brokers said trading sentiment improved as investors picked up fundamentally strong stocks led by Tata Consultancy Services after the company posted attractive quarter earnings.
TCS climbed 2.26 per cent to Rs 1,319.50 as company reported net profit 49.2 per cent to Rs 3,434 crore in the September quarter. Bajaj Auto rose 0.69 per cent to Rs 1,782.50 after it posted higher-than-expected earnings, followed by Larsen and Toubro (2.17 pc).
They said market received further support on a similar recovery on the global front. In 30-share BSE Sensex, 20 stocks closed higher. RIL and Infosys also rose.
The capital goods sector index gained the most (1.30 per cent), followed by healthcare index (1.07 per cent). Banking index rose 1 per cent while IT index jumped by 0.84 per cent.
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Similarly, the 50-share National Stock Exchange index Nifty rose by 32.90 points, or 0.58 per cent to 5,717.15, after touching a low of 5,658.05.
"Nifty showed good strength from support near 5650 levels and closed in green above 5700 levels. Buying interest may be continuing above 5720 levels," said Puneet Kinra, Senior Technical Analyst, Bonanza Portfolio.